This
is an example showing how your entitlement to State Pension (Contributory) is
calculated under bilateral social security agreements.

Case
study

Mary worked in Ireland for just over 11 years and has 600 Irish
contributions. She has spent the last 23 years working in the US and has 1,200
contributions paid there. In total she has worked for 34 years since first
entering into insurable employment.

She will be 66 next month and has returned to Ireland to retire. She wants
to know if she will qualify for the State Pension (Contributory) when she is 66
years of age.

Step 1

Firstly you must check whether Mary would qualify for an Irish State Pension
based on her Irish contributions alone.

Mary's Irish contributions: 600

Total number of years worked (since entering into insurable employment to
the end of the last complete tax year before reaching pension age): 34 years

Total number of contributions by the number of years worked: 600 ÷ 34 =
17.65

Mary's yearly average number of contributions is 18. She would qualify for a
reduced Irish State Pension (Contributory) of €152.00 (in 2016).

Step 2

Calculate Mary’s 'notional rate of pension'. This is the rate of State
Pension Mary would be entitled to if all her contributions were assessed as
Irish contributions. To find the notional rate of pension, calculate the total
of all Mary’s contributions (both foreign and Irish) and divide it by the
number of years worked in Ireland and abroad.

Total number of years since entering into insurable employment to the end of
the last complete tax year before reaching pension age: 34 years

Total number of contributions by the number of years worked: 1800 ÷ 34 =
52.9

Mary’s yearly average number of contributions is 52.9

Mary’s notional rate of pension is the maximum rate because she has a
yearly average contribution of 52.9. This is more than the required yearly
average of 48 for the maximum State Pension (Contributory).

Therefore, her notional rate of pension is the same as the maximum rate of
State Pension (Contributory) of €233.30.

You take the figure for the notional rate of pension and multiply by the
total number of Irish contributions (B):

€233.30 x 600 = €139,980

Next, divide €139,980 by the total number of Irish and US contributions
which we calculated earlier to be 1800:

€139,980 ÷ 1800 = €77.76

Mary’s rate of State Pension (Contributory) would be €77.76. In
this case Mary would be better off claiming a State Pension based on her Irish
contributions alone rather than one calculated under bilateral social security
agreements.

Contact Us

If you have a question relating to this topic you can contact the Citizens Information Phone Service on 0761 07 4000 (Monday to Friday, 9am to 8pm) or you can visit your local Citizens Information Centre.